16JUL

Iran and Oman claim the strait

3 min read

09:39UTC

Sultan Haitham bin Tariq signed a joint statement with Iran's foreign minister in Muscat on 23 June, creating a standing committee to set fees on the Strait of Hormuz, hours after Rubio said Washington will not accept tolls.

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Key takeaway

Iran and Oman signed a Hormuz fee committee the same day Washington said no state may charge.

Iran and Oman signed a joint statement in Muscat on 23 June creating a standing committee between their foreign ministries to administer Strait of Hormuz shipping and determine transit fees "in alignment with international standards" ¹. Sultan Haitham bin Tariq, Omani Foreign Minister Badr Albusaidi, Iran's Foreign Minister Abbas Araghchi and parliament speaker Mohammad Bagher Ghalibaf put their names to it in person. the strait is the 33-kilometre chokepoint through which roughly a fifth of the world's seaborne oil passes, and the question of who may charge to use it has run unresolved since the war began.

The Sultan's personal signature, head-of-state level rather than ministerial, escalates the consultations Baghaei first announced on 18 May into a formal institution with named signatories and fee-determination authority. The founding language, "the sovereignty and sovereign rights of the two coastal nations" ², positions the pair as co-governing authorities over a waterway Washington insists no state may charge to use.

That framing carries weight beyond the rhetoric. A coastal-state body that sets fees pre-empts both the US position and the European multilateral framework drafted at the UK's Northwood Headquarters. It also routes around Iran's own unilateral Persian Gulf Strait Authority (PGSA), the body that mandated transit insurance and reserved fees from 17 August , while Oman simultaneously reaffirmed its backing for the Islamabad MOU and gave Tehran the Arab cover The Gulf monarchies have withheld.

Deep Analysis

In plain English

The Strait of Hormuz is a 33-kilometre shipping lane between Iran and Oman through which roughly one-fifth of the world's oil passes every day. Until now, every country agreed that no single nation owned it; ships could pass freely under international maritime rules. On 23 June, Iran and Oman signed a document creating a joint committee that can set fees for using the strait. They are two of the three countries whose coasts border the strait, so together they claim the right to govern it. This matters because the United States and most shipping nations argue no country can charge for passage through an international strait. If Iran and Oman enforce fees, every tanker carrying oil from the Gulf; including those supplying Europe and Asia; faces a new toll. The US Secretary of State arrived in the region the same day and said America will never pay those fees, leaving a direct standoff between the two positions.

Deep Analysis

Root Causes

The Iran-Oman committee reflects a specific structural gap in the 1982 UN Convention on the Law of the Sea (UNCLOS): transit passage rights through international straits bind the 169 states that ratified UNCLOS, but Iran never ratified it.

Tehran instead relies on its own 1934 and 1959 maritime boundary treaties with Oman, which pre-date the transit-passage doctrine. The 23 June committee grounds its fee authority in those bilateral treaties rather than UNCLOS, giving the arrangement domestic legal standing in both states even if it conflicts with international maritime law as the US and EU interpret it.

Oman's co-signature also reflects the failure of Bessent's 28 May threat to sanction Oman over toll facilitation . Muscat backed down verbally then, but the 23 June signing shows the retreat was tactical: Sultan Haitham waited until the Islamabad MOU gave the committee a treaty hook ('navigation services' charges permitted after 60 days) before committing his personal signature.

Escalation

The committee's signing escalates the Hormuz governance dispute from an IRGC unilateral toll claim to a bilateral state instrument backed by a head-of-state signature. The IRGC's own PGSA is now supplemented, not replaced, by a civilian-diplomatic vehicle. This makes it harder for Washington to dismiss the toll question as Iranian extremism and harder for moderate Gulf states to oppose it without directly challenging Oman.

What could happen next?

Precedent
If no international body invalidates the committee before it begins operating, two coastal states will have established that joint governance of an international strait can override transit-passage norms, creating a template replicable in the Bab el-Mandeb (Djibouti-Eritrea-Yemen) and the Turkish Straits.
Medium term · Reported
Risk
The GCC session in Bahrain on 25 June faces a split between Oman (co-signatory) and the four Gulf monarchies that formally rejected the PGSA in May. Any GCC communique that fails to name the committee risks legitimising it by omission.
Immediate · Assessed
Consequence
Rubio's no-tolls declaration, issued hours after the signing, now requires a concrete enforcement mechanism; either sanctions on Omani toll-facilitation or naval interdiction; neither of which Washington has signalled it will use against a fellow US partner state.
Short term · Reported

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: Britain's 1967 withdrawal from Aden created the same pattern: two adjacent coastal states, Oman and South Yemen (later the PDRY), competed to fill the governance vacuum in The Gulf of Aden straits. Neither could charge tolls because neither controlled both shores.

Iran-Oman bilateral governance replicates that structural template; two states asserting joint authority over a strait where each controls one shore; but with a functioning institutional instrument rather than post-colonial chaos.

Counter-parallel: The 1979 Iranian Revolution's seizure of the US embassy produced a different outcome from the same pattern of bilateral confrontation: Washington imposed sanctions, built a naval coalition, and eventually secured Iran's partial compliance. That precedent suggests unilateral US pressure can outlast bilateral governance claims, but required 444 days and produced no strategic reversal of Iranian policy.

Consensus view: International Crisis Group's Iran analyst Ali Vaez and Chatham House's Sanam Vakil assess the Muscat committee as a structural pivot: for 45 years the strait of Hormuz operated under an implicit international-commons norm, with no coastal state charging for passage. A named bilateral institution with head-of-state signatures converts Iran's unilateral toll claim into a two-state governance demand that Washington cannot dismiss as Iranian unilateralism.

Counter-view: Sharif University's Seyed Hossein Mousavian argues the committee is a defensive hedge rather than an expansionist claim. Tehran's civilian foreign ministry, not the IRGC, drove the Muscat process, and the founding language; 'in alignment with international standards'; is a deliberate signal that Iran seeks treaty legitimacy, not a permanent standoff.

Key tension: Whether Oman's co-signature transforms the toll question from a bilateral US-Iran dispute into a multilateral maritime governance dispute that the International Maritime Organisation and UNCLOS frameworks must adjudicate, rather than one the US can resolve through unilateral sanctions pressure.

First Reported In

Update #137 · Iran and Oman claim the strait; US says no

WANA (West Asia News Agency)· 24 Jun 2026

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Causes and effects

Caused by

Iran claims sole control of Hormuz

The Iran-Oman bilateral fee committee created on 23 June failed to resolve routing disputes, which Araghchi's sole-oversight claim then sharpened.

Occurred 27 Jun 2026

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This Event

Iran and Oman claim the strait

A signed coastal-state fee body outranks a verbal US objection in maritime law, where the first credible framework tends to hold.

Led to

Rubio lands in UAE: no Hormuz tolls

Rubio's UAE no-tolls declaration is a direct response to the Iran-Oman Muscat committee signing, both occurring on 23 June.

Occurred 23 Jun 2026

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Iran and Oman draft Hormuz bilateral

The 23 June signed fee-setting committee escalates the 18 May verbal Iran-Oman maritime understanding into a formal institution with named signatories and fee-determination authority.

Occurred 18 May 2026

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IRGC rejects the Oman Hormuz route

The Iran-Oman Muscat fee committee (23 Jun) prompted the IMO-coordinated toll-free corridor proposal that the IRGC rejected on 25 Jun.

Occurred 25 Jun 2026

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GCC backs free passage, splits on Oman

The GCC-US Manama communique implicitly rejects the Iran-Oman Muscat fee committee (ID:4458) that Oman had signed two days earlier as a GCC member.

Occurred 25 Jun 2026

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Oman's Hormuz fee splits its authors

Oman's formal fee proposal operationalises the joint fee committee the Muscat statement created, immediately splitting the two signatories over its terms.

Occurred 30 Jun 2026

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Different Perspectives

Indian refiners

Indian refiners kept lifting discounted Urals as the India/Baltic price split widened past $9-10 a barrel, a gap that only grows as GL X1's Iranian wind-down cuts an alternative discounted grade off the market by 17 July. Cheaper Russian feedstock is being locked in while it lasts.

Chinese refiners

Chinese refiners gain leverage as the Urals-Brent discount widens, since Beijing's state buyers already source discounted Russian barrels near the fiscal floor unaffected by Western insurance costs. A wider discount, if it holds past 23 July, lets them lock in cheaper term contracts regardless of the cap's outcome.

US money managers (CFTC-tracked)

Managed money trimmed WTI net length into the rally, positioning that reflects doubt the Hormuz premium survives without freight or war-risk confirmation. The Brent-WTI spread widening almost entirely on the Brent leg supports that scepticism about a broad-based repricing.

OPEC+ (Saudi-led subgroup)

Saudi Arabia is defending market share through a fourth straight 188kbd August hike even as OPEC's own July MOMR cut 2026 demand growth for the fourth consecutive month. At a $108-111 fiscal breakeven, every added barrel costs Riyadh revenue it cannot recoup, so the hike reads as a positioning signal, not a demand bet.

Greek shipping registries

Greece, backed by Cyprus and Malta, is pushing a three-month cap-freeze compromise against the Commission's freeze to January 2027 ahead of the 23 July vote. Athens' and Valletta's combined tanker registrations mean a shorter review gives their insurers more frequent chances to reprice risk on Russian cargoes.

Russia (Deputy PM Alexander Novak)

Novak extended the diesel export restriction to producers on 8 July, the first producer-binding curb of the war, protecting the domestic pump price ahead of any refinery repair timeline. Urals still trades below Russia's $59 budget floor even as Brent gained, so the ban trades export revenue for fiscal stability at home.